MLK Hospital Takes on Blue Cross

LOS ANGELES (CN) — Martin Luther King Hospital in Los Angeles has sued Blue Cross and Blue Shield of Georgia, claiming it reimburses emergency room patients directly, as a “retaliatory tactic” to strong-arm out-of-network hospitals into signing cut-rate contracts. Martin Luther King Jr. Community Hospital claims it’s found more than $350,000 in Blue Cross payments to its patients, rather than to the hospital, in defiance of what it calls the custom in the industry. MLK Hospital provides emergency services regardless of patients’ insurance coverage or ability to pay. As is “custom” in the industry, the hospital says, it enters into written contracts with patients who have insurance, who in turn assign their insurance payments to the hospital. “When MLK submits its claims to all insurance companies, including the defendant in this action, MLK notifies the insurance company that it has received such assignment of the right to payments from its patients,” the lawsuit states. However, “Rather than paying MLK directly for the medically necessary emergency services it provided to its members, defendant Blue Cross and Blue Shield of Georgia issues the payment to the patients,” the lawsuit states. “This is a retaliatory tactic used by BCBSG to force out-of-network hospitals to enter into contracts with BCBSG for very low rates.” Blue Cross pays in-network hospitals directly, MLK says. It says that patients who receive checks from Blue Cross are “unaccustomed to receiving payments in such large amounts.” As a result, the hospital says, patients use insurance money for personal expenses and are unable to pay their medical bills. “Some of these patients do not know that they are required to endorse those checks over to MLK,” the lawsuit states. “Other patients know that they should endorse those checks over to MLK, but instead use such funds to pay for their personal expenses. When MLK attempts to collect the amounts from these patients, the money is often spent.” For instance, MLK says it billed a non-party patient, B.G., $23,162.20 for diagnostic tests for chest pains. Blue Cross allowed $10,392.95 on the claim and sent a check directly to R.B., and MLK was unable to contact R.B. about the payment. “To date, MLK has identified over $350,000 in payments that BCBSG has made to patients instead of to MLK,” the lawsuit states. The defendant is a member of Blue Cross Blue Shield Association, which operates 39 independent Blue Cross Blue Shield companies. None of the parties immediately responded to requests for comment Wednesday. MLK, a no-profit, seeks at least $350,000, an injunction and damages for intentional interference with contract and violation of California’s business and professions code. It is represented by Daron Tooch with Hooper, Lundy & Bookman.